Be careful what you wish for.
We recently saw the report from the Climate Commission that has been released for consultation and listed below are some of the recommendations from the Commission’s plan:
These measures may seem unrealistic – but with the Government having publicly committed to implement whatever the Commission recommends, we need to be very sure that what is put forward to government will actually improve our emissions profile.
But according to the Commission’s own analysis, this plan isn’t even necessary. New Zealand is already on track to meet its “net zero carbon” target using existing tools i.e. the existing Emissions Trading Scheme.
In fact, the proposed regulations will do nothing to reduce our overall emissions. This is because of the way the ETS works: emissions are already capped and paid for. This means that when the Government goes beyond the ETS and uses regulations to push down emissions in parts of the economy covered by cap and trade, it just frees up credits for people to increase emissions in other parts of the economy – it’s what climate economists call the “waterbed effect”.
Here’s just one example: the Ministry of Education will spend $50 million to replace or convert 90 coal boilers in schools. According to the government this will reduce emissions by 33,000 tonnes – that is reducing emissions at $1,515 per tonne. By comparison, the ETS can remove one tonne of emissions for $39, a nearly 40-fold performance gap!
And because coal is already in the ETS, the waterbed effect means replacing the school boilers will see emissions raise somewhere else. There is absolutely no gain for the climate.
Let’s put the Waterbed effect to one side and look at the other recommendations as listed above:
These alone will have the effect of people holding onto older less environmentally sound vehicles for much longer as many will not be able to afford to change. With the present production rates and availability of alternative energy powered vehicles and given the size of NZ’s vehicle fleet overall, it is highly likely that this recommendation alone is likely to have a severe perverse effect on the national economy due to a failure to supply replacement vehicles in a timely manner.
The costs and time required for developing the support infrastructure for the alternative energy vehicles will also put severe pressure on the national economy.
Overall I cannot see this recommendation being anything other than a huge Failure both economically and environmentally.
This recommendation must be evaluated from the point of security of supply. Given the predicted effects of climate change (global warming) and the changes to our weather patterns it is likely that we will see more periods of lower rainfall and higher temperatures which will have a negative effect on the Hydro Generation capacity of our dam networks.
We require a huge capital injection to upgrade the distribution networks to allow for the transmission of bulk electricity from the South Island hydro schemes to the North Island.
We will also need to take into account the large increase in demand from both the huge number of EV’s that are predicted to be in use by 2032 and also the effects of the ban on the use of natural gas.
If we are then going to rely on wind and solar generation to replace coal & gas fired generation and provide the country’s electricity needs we are gambling on the weather.
There is talk of developing a lake for hydro generation storage which would be filled by pumping when there was low demand. This is again gambling on the weather for an available level of water to enable pumping to take place initially. This hydro battery storage system will also be expensive when compared to normal generation methods.
Almost the whole of the Climate Commission’s report is based on an assumption that we will replace fossil fuelled energy consumption by using electricity and that the price of electricity will go down with volume sales. The same assumption is made in relation to EV’s (i.e. that is they will get cheaper as the demand goes up).
I can only say that in my opinion and in the light of historical evidence, I have yet to see the price of electricity drop. The prediction years ago when the distribution networks were privatised and sold off, was that the prices would drop and stay lower due to private sector efficiencies. Again this was a failure as the prices have steadily risen over time.
So in my opinion the increase in demand will only fuel the profits of the private producers and the likelihood of a reduction in either the price of electricity or EV’s is no more than a wish and we all know that in the real world of commerce wishes not only don’t come true they don’t exist.
This recommendation amounts to a reduction of: 3,924,000 Sheep, 540,000 Beef cattle and 975,000 Dairy cattle based on the current numbers for 2020.
This level of reductions will reduce the amount of agricultural methane emitted into the atmosphere in New Zealand but the net effect globally is more than likely to result in an increase in the release of methane from stock.
The production from New Zealand Farms is currently mostly exported and this level of reduction in numbers will affect the level of exports which will in fact mean that other countries will produce the extra instead of New Zealand farmers.
New Zealand Farmers are renowned worldwide as the most environmentally efficient agricultural producers so therefore the extra production from other countries will be produced by less environmentally sound methods which will in effect mean that there will be an overall global increase in emissions rather than a decrease (even though New Zealand will see a decrease in its emission levels).
The other perverse outcome from this recommendation is the economic effects of this. Many farmers are presently struggling to be remain economic and this level of reduction will actually result in many farmers leaving the industry with an economic effect that may out of all proportion to the required result.
This recommendation will also jeopardise the security of food supply within New Zealand and also in many of our trading partner nations even though the Paris Accord specifically excluded impacts on food production.
This recommendation to me seems to be more about social engineering/urban planning or a nudge for the Green Party’s agenda than anything that is in the commission’s mandate for this enquiry.
Putting aside the issue of whether or not it is a part of their mandate, the issue is a non-event as, if the change to wholly EV’s is implemented, then it is no problem whether the population rides walks or drives.
Overall it is my belief that this whole report should be accompanied by a cost benefit analysis to allow the average person to evaluate whether the recommendations are reasonable or whether they are going to bankrupt our country.
My own opinion is that the cost benefit analysis is being deliberately withheld as it may drive the public to oppose this report on basic economic grounds.
Yes we need to do something about the environment in relation to climate change but that does not need to be at the expense of the whole country going into an economic recession.
There was a report put out by NZIER in 2018 which stated that for us to be carbon neutral by 2050 we would suffer approximately a 20% cut to our GDP yet here we are just a year later with this Commission trying to convince us (without opening the books) that it will be less than 1% of GDP.
All this is without taking into account all of the other detrimental effects of this reports recommendations such as the cost to the environment in developing the infrastructure, the recycling of redundant EV’s (particularly the batteries) the economic squeeze from lack of export earnings through the reductions in primary production etc.
I would need to see a detailed cost benefit analysis of all of these recommendations from the Climate Change Commission before I would support any of these when in fact we can already meet the targets through the ETS.
The government has said that it is willing to accept and act on the recommendations from the Commission and should that be the case then we all need to be very afraid of the end result of that decision as it is we the taxpayers of New Zealand that will ultimately carry the burden of paying for this.